Stem Cell Firms Jump on Cloning News

NEW YORK – Shares of several U.S. biotechnology firms rose on Monday on news that a private firm had cloned the first human embryos, but industry analysts said the gains were unwarranted.

The firms that benefited were ones that aim to produce medical treatments from stem cells, the master cells which create all the body's specific cell types. But, analysts said the companies derive their stem cells from methods other than cloning.

Geron Corp. was up 68 cents to $10.86, or almost 7 percent, in heavy trade on the Nasdaq stock exchange. Aastrom Biosciences Inc. rose 12 cents to $1.13, or 12 percent, while StemCells Inc gained 24 cents to $2.95, also on the Nasdaq.

The firms saw their shares rally a day after Advanced Cell Technology Inc. (ACT) said it had cloned three human embryos as a potential means of extracting stem cells from embryos as treatments for diseases.

Steve Brozak, a biotech analyst with Vanguard Capital, said there was no logical reason for the rally in shares of Geron, Aastrom or StemCells. Unlike ACT, he said none of the firms aim to clone human embryos to develop stem cells.

Instead, the three publicly traded companies derive stem cells in a variety of other ways. Those used by Geron and StemCells are obtained directly or indirectly from discarded fetuses, whereas Aastrom derives its stem cells from adult bone marrow and blood from umbilical cords.

"It looks like day traders are going out and buying these stocks without doing their homework," Brozak said.

Stem cells are parent cells whose progeny theoretically can be coaxed into developing into more than 200 different cell types in the body, including liver or heart cells that could help revive such diseased organs.

ACT, based in Worcester, Massachusetts, said it placed a female donor's ovarian cells into hollowed-out human eggs and coaxed growth of clones, embryos with identical genetic material as the donor.

All three embryos died, the most advanced of which attained the microscopically puny size of six cells before it stopped growing. Some scientists declared the experiment a failure because an embryo needs to divide into at least 100 cells before it can generate the sought-after stem cells.

Others said ACT's partial success indicated it might indeed be possible to create embryos for the express purpose of extracting their stem cells, despite the continuing political and religious controversy of creating life only to destroy it for medical ends.

But it will take a decade or longer for any firm to turn such efforts into a financial payoff, said Matt Geller, a biotech analyst for CIBC World Markets who described ACT's cloning project as a minor scientific advance. "Six cells do not a human make," Geller said.